DURO FELGUERABFS TO CONSTRUCTION THROUGH EPC

“YOU´LL NEVER WALK ALONE”

20TH APRIL 2017 JAKARTAJose Valdes Suarez (jose.valdes@durofelguera.com)Iñigo Garcia Pardo (inigo.garcia@durofelguera.com)

MINING IN A DAY SEMINAR

DURO FELGUERA COMPANY OVERVIEW AND MAJOR REFERENCES

“Our goal of sending all our employees, including our sub-contractors home safely

at the end of every shift, is integrated into every decision and activity”.

Safety at the core of our Success

Our culture is based on positive reinforcement, interdependence among workers and good practices.

Strengthening preventive culture on all business lines and throughout the whole hierarchy, with people as the main value to protect.

Commitment to professional development and acquiring good preventive habits for the organization's professionals.

Promotion of safety in contractors in the international field.

Development of training, information and awareness programs among employees and our contractors.

The company Duro y Cia. is set up tomanufacture iron products at the factory in La Felguera (Asturias-Northern Spain)

The company changes to becomeSociedad Metalúrgica Duro Felguera

(SMDF) and leads the domestic steeland coal markets for seyeral years.

SMDF shares starttrading on the Madrid stock exchange.

Sale of mining and steel assets and the company focuses its business on

the manufacture of industrial equipment.

International actitiviescommence and the companyevolves towards industrial construction and assembly.

Specialisation in turnkey powergeneration and industrial

projects.

New headquarters in Gijón whereengineering and projects are concentrated.

1858

1900

1905

1966-1967

1970

1994

2009

155 years of industrial history

159 years of industrial history

Company Overview

4

Engineering, Procurement & Construction (EPC)

Erection, (ETC)Operation & Maintenance (O&M)

Other Activities

Energy Mining & Handling Oil & Gas

Coal Power Plants

FGD& DeNox

Biomass Plants

Cogeneration Plants

Simple & Combined Gas Cycles P.P

Thermosolar Plants

Mineral Processing Plants

Material Handling

Process Units

Storage Tanks & Terminals

LNG Terminals

Pressure Vessels

Railway Systems

Tunnel formworks

Communication

Manufacturing Intelligent Systems

Geothermal Power Plants

Fertilizer Plants

Mechanical, E&I Installation, Heat Insulation

Operation & Maintenance

Services

Chemical Plants

Warehouse Management Systems

Infrastructures &Energy

Erection, Overhauling ofsteam & gas turbines

E-Services

Security and Defense

Operating in sectors of the futurePresence in all fieldsOrganization Structure

5

Mining and Handling

• Engineering, Procurement and Construction projects in the mining and mineral handling field.

• Leading company in the construction of mineral processing and bulk material handling facilities, and bulk loading and unloading port terminals.

• Strategic Alliance between DF and for the development and execution of EPC projects.

BULK HANLING: COAL PORT TERMINAL, INDIA MINING:IRON ORE PROCESSING PLANT WITH CAPACITY OF 4 MTPY, MAURITANIA

• Vertical shafts and all related equipment

• Underground and surface loading stations

• Crushing and Screening Plants

• Conveyor systems

• Truck loading and unloading stations

• Ore storage and homogenisation yards

• Comminution Circuits

• Gravity circuits

• Flotation Concentrators

• Leaching ( Heap/Tank)

• Hydrometallurgy (SX+EW)

• Gold CIL Circuits

• Uranium IX Resins

• Roasting/Smelting

• Stackers and reclaimers

• Grab shipunloaders

• Ship loaders

• Train loading and unloading systems

• Conveyor systems

• Coal

• Iron ore

• Aggregates,

• Cement and Clinker

• Petroleum coke

• Sulphur

• Phosphates

• Fertilizers

Open cast or underground mines Treatment Plants

Mining and Mineral Processing Handling

Equipment Materials

6

DF- Specialist in EPC Projects Execution

Scope of Supply of a typical DF Mining and Handling Project consists of :

Conceptual DesignBasic and Detailed engineeringSupply, Transport,Fabrication, Erection, Commissioning, Testing and Warranty related Services

Including the entire Material Handling System and Auxiliary Equipment, Power Distribution, Communication and Lighting.

Civil Works design and supervision are also included, partnering with first class specialists worldwide.

Photograph: Erection Works Gangavaram Port Project7

Key Aspects for Success on a EPC Project

Working as one team with the owner to define Project’s goals and

scope.

Good execution strategy/ Project organization

Local Knowledge

Reliability and capacity to perform the work

Own know-how and specialist technological partners

Financial capabilities

Global presence

8

The perfect size to workeverywhere

GLOBAL PRESENCE

9

DURO FELGUERA IN INDONESIA

The history of DF in Indonesia dates back to 1982, when we supplied from our workshop in Spain specialized on manufacturing of pressure vessels (FCP) the several equipment for the Hydrocracking Complex for Pertamina in Dumai.

During the 90´s our Material Handling Division have been appointed as EPC supplier of 16 Overhead Cranes for Krakatau Steel Facilities in Cilegon.

PT. Duro Felguera Indonesia is established since 2012 as a mining services company, with the license of the Ministry of Energy and Mineral Resources. We have delivered two projects and several studies.

Duro Felguera is proud member of the following professional associations:

Association MEMBER

ASPINDO B-081/KTA-A.a/112/IX/2014

GAPENRI 33.101

10

DURO FELGUERA INDONESIA REFERENCESMATERIAL HANDLING

DURO FELGUERA INDONESIA REFERENCESMATERIAL HANDLING

Description

Turn Key supply of Coal Mine Storage Yard ConveyorSystem including:

Two (2) Conveyors 2,500 tph. Two (2) Transfer Towers One (1) Travelling Tripper two- way chute 2,500 tph

Customer

P.T. LAMINDO INTER MULTIKON

Location

North Kalimantan – INDONESIA

Status

Completed

COAL STACKING CONVEYOR SYSTEM

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DURO FELGUERA INDONESIA REFERENCESMATERIAL HANDLING

Description

Turnkey supply of river barge loading terminal consisting of:

Barge loading conveyors:• BC01 and BC02: 800 tph.

Loading hoppers with variable speed belt feeders:• 4 on BC01• 3 on BC02

Complete Civil works:• Land filling and conveyor foundations.• River barge mooring jetty,

Client

PT BARA RIA SUKSES

Location

Jambi . Sumatra Selatan. INDONESIA

Status

Completed

JAMBI COAL TERMINAL

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DURO FELGUERA MAJOR REFERENCESMATERIAL HANDLING

Description

Iron Ore Wagon Tripper: 24 tips/hour. Iron Ore Stacker 1,500 tph. Iron Ore Bucket Wheel

Reclaimer 5,400 tph Iron Ore Shiploader 5,400 tph; 200,000 DWT vessels Belt conveyor system 1,500 / 5,400 tph. Two Coal Grab Shipunloaders 62 t. Vessel up to

120,000 DWT. Coal Stacker 4,800 tph. Coal Bucket Wheel Stacker

Reclaimer 4,800 / 1,500 tph. Coal Bucket WheelReclaimer 1,500 tph.

Coal Train Loading System 1,500 tph. Belt Conveyor System. Total length approx. 9 km.

Customer

GANGAVARAM PORT LIMITED

Location

Visakhapatnam. Andhra Pradesh - INDIA

Status

Completed

IRON ORE AND COAL SEA PORT TERMINAL

DURO FELGUERA MAJOR REFERENCESMATERIAL HANDLING

15

DURO FELGUERA MAJOR REFERENCESMATERIAL HANDLING

Description

Belt Conveyor System 4.800 tph Two (2) Shipunloaders FDR 2.400 tph / CDR 2.800 tph Two (2) Stackers 4.800 tph Two (2) Reclaimers 3.840 tph In motion Wagon Loading Station. Electrical and I&C

System Dust Suppression System. Civil Works Integration with existing Port Terminal minimizing

downtime interface

Customer

GANGAVARAM PORT LIMITED

Location

Vishakhapatnam. Andra Pradesh. INDIA

Status

Execution

PORT TERMINAL FOR GANGAVARAM PORT EXPANSION

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Description

Two (2) Stacker-Reclaimer 3,250/1,750 tph. One (1) Stacker 3,250 tph. Six (6) Belt Conveyors 2,250 tph & Eight (8) Belt

Conveyors 3,250 tph Two (2) Oversea conveyors 3 km length 3,250 tph Eight (8) Transfer Tower Four (4) Trucks loading station, including hoppers and

weighing. Dust suppression system, Fire Fighting Systems Electric and Control System, Sub-Station 110 kV

Customer

TUTICORIN COAL TERMINAL PVT.LTD. (ABG-LDA Group)

Location

Tuticorin - INDIA

Status

Execution

COAL TERMINAL AND TRUCK LOADING SYSTEM OF TUTICORIN, NCB II

DURO FELGUERA MAJOR REFERENCESMATERIAL HANDLING

17

Description

2 Grab Shipunloaders - 54 t. 1 Stacker for Coal Stacking. Capacity: 5,400 tph. 1 Water Processing Plant. Re-running Water System. Belt Conveyor System 5,4000 tph coal. B = 1,800 mm. Trucks Weighing. Fire-fighting system. Dust Collection

System. Pile Spraying System. Trucks washing system. Offices buildings. Workshop – storehouse. Electric Sub-

station.

Customer

ENDESA GENERACIÓN

Location

Cabo Prioriño Port. El Ferrol - SPAIN

Status

Completed

TERMINAL FOR COAL UNLOADING AND STORAGE

DURO FELGUERA MAJOR REFERENCESMATERIAL HANDLING

18

DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

Description

The plant consist of: Crushing: Primary Crusher and Pebbles Crusher Grinding: SAG Mill and Ball Mill Gravimetric Circuit:: Spirals, Shaking Tables and

Knelson Concentrators Flotation: Rougher, Cleaner and recleaner CIL plant Activated Carbon Desorption Electrolysis. Crude Bullion Production Cyanide destruct Thickening and filtering

Customer

RIO NARCEA GOLD MINES S.A.

Location

Belmonte. Asturias – ESPAÑA

Status

Completed

EL VALLE GOLD CONCENTRATION PLANT 0.9 Mtpy

DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

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Description

Turn Key execution of following scope: One Concentrate Stacker 3,000 tph. One Double Bucket Wheel Bridge Reclaimer 3,000 tph. One Bucket Wheel Reclaimer 3,000 tph. Belt Conveyor System 3,000 tph. Total length approx.

3 km. Auxiliary systems: infrastructures and civilbuildings, power distribution for all facilities.

Customer

C.V.G. FERROMINERA ORINOCO, C.A.

Location

Ciudad Piar - VENEZUELA

Status

Completed

PHASE II OF AN IRON ORE 12 Mty CONCENTRATION PLANT (1/2)

DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

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PHASE II OF AN IRON ORE 12 Mty CONCENTRATION PLANT (2/2)

Process plant

The Process Plant consist of two separate “mirror image”processing lines with parallel main equipment and a number ofservices in common for both plants.

Main equipment is described as follow:

Two (2) Ball Mill Fourteen (14) Cyclones Modules Twelve (12) Hydrosizers Twenty (20) Banks of Rougher Spirals Six (6) Banks of Scavenger Spirals

Sixteen (16) Medium Intensity Magnetic Separators Four (4) Primary Wet High Intensity Magnetic Separators Four(4)Secondary Wet High Intensity Magnetic Separators Six (6) Rougher Column Flotation Cells Six (6) Cleaner Column Flotation Cells Two (2) Belt Filters Two (2) Concentrate Thickeners Two (2) Tailing Thickeners Tailing Dam designed for 20 years. Water Storage

Facilities.

DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

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Description

Roy Hill Project has been designed to export 55 Mta of Iron Oreand includes Mine, Process Plant, Storage Yard, Heavy RailroadSystem from Mine to Port and New Port Facilities at southwestof Port Hedland, Western Australia.

Within this megaproject, DF has been awarded the supply of allprocess equipment / electrical system and the EP package ofthe ore handling system both at the Process Plant Storage Yardand at the large Port facility.

The handling equipment for Process Plant and Port has acapacity around 14,000 tons per hour, which ranks any of themwithin the range of the largest in the world. …/…

Client

SAMSUNG C&T Corporation

Location

Pílbara. AUSTRALIA

Status

Completed

ROY HILL IRON ORE PROJECT (1/2)

DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

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DURO FELGUERA MAJOR REFERENCESMINERAL PROCESSING

ROY HILL IRON ORE PROJECT (2/2)

Equipment

Within the Process Plant, which includes five main parallel processlines, main equipment is described as follows:

• Three (3) units of Primary and Secondary CrushingModular Facilities

• Five (5) Scrubbers• Five (5) Modules of Wet Coarse and Fines Screens• Three (3) Modules of Tertiary Crushers and Dry / Wet Screens• Five (5) Modules of Deslime Cyclones• Five (5) Up Curret-Classifier• Five (5) Modules of First and Second Stage of Spirals• Five (5) Belt Filters• Three (3) Tailings Thickeners• Process Water Dam and Residue Storage Facility• One (1) Laboratory

In addition to all belt conveying system, in excess of 12 Km length,following equipment are going to be designed, manufactured andsupplied (Process Plant equipment also to be erected):

• Process Plant site:o One (1) Iron Ore Fixed Slewing Stacker 13,700 tpho One (1) Fines Ore Traveling / Slewing Stacker 5,600 tpho One (1) Lump Ore Traveling / Slewing Stacker 5,600 tpho One (1) Traveling / Slewing Bucket Wheel Reclaimer 16,700 tpho One (1) Train Loading Station• Port site:o Two (2) Ore Traveling / Slewing Stacker 14,500 tpho One (1) Car Dumper 12,900 tpho One (1) Traveling / Slewing Bucket Wheel Reclaimer 16,700 tpho One (1) Traveling / Slewing Shiploader 12,700 tph

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BFS TO CONSTRUCTION THROUGH EPC

“YOU´LL NEVER WALK ALONE”

PROJECT PHASES

26

* J.Noort. Effective Mining Project Management Systems. 27

FEASIBILITY STUDIES

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• Typically, a bankable feasibility study is a comprehensiveforward analysis of a project’s economics (±15% precision) to beused by financial institutions to assess the credit-worthiness forproject financing.

• The feasibility part is guided by a set of assumptions, a strategy,development conditions and a planned outcome. The outcome isuncertain and targets and objectives may not be achievable.

• The bankable part relates to the basis and conditions for a futurefinancial agreement to collateralize mining assets for a projectloan, to set a premium and a repayment schedule, withappropriate risk/reward factors.

BFS DEFINITIONS

29

BFS CONTENTS

1. Executive Summary Report

2. Geology and Ore Resources/Reserves

3. Mine Planning

4. Mineral Processing and Testwork

5. Processing Plant

6. Ancillary Services and Requirement

7. Capital Cost Estimation

8. Operating Cost Estimation

9. Baseline Studies

10. Marketing

11. Rights, Ownership and Legal Matters

12. Financial Model and Tax

13. Socio-Environmental Effects

30

• Normally, a feasibility study is prepared by a qualified engineeror estimator. It is a forward-looking document that captures aprecision level but not necessarily an acceptable* level ofaccuracy.

• So, what does “bankable feasibility” really mean in terms ofaccuracy for owner and investor confidence in the developmentand construction of a mining project?

• And how does risk analysis capture precision and accuracyfor better decision-making and executing a transparent,accountable and defensible execution plan?

* As known or required by the project owner

PRECISION / ACCURACY

31

32

* AACE No. 47R-11 MINING AND MINERAL PROCESSING

COST ESTIMATE CLASSIFICATION SYSTEM

33

CONCLUSIONS BFS

Some of the NI 43-101, JORC… studies have low engineering rigor due to lack of proper data and information.

A Qualified Person’s signature is not always a guarantee of reliable results.

Investors should engage independent third party engineering evaluation of reports before putting money on projects.

If investors demand more rigor of these reports, owner and engineers will be forced to keep up, improve their studiesand everyone will benefit.

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EPC & EPCM

35

DEFINITIONS

EPCM which is an abbreviation for Engineering (E), Procurement and Construction Management (CM)

EPCM contract has an open form and structure

EPC which is an abbreviation for Engineering (E), Procurement (P), and Construction (C)

EPC contract ruled by FIDIC Silver Book, Orgalime, ICC, ENAA, ICE, ECC, MDB Harmonised

EPC is “A contract option in which the EPC contractor is responsible for all activities from design to procurement and construction to deliver the asset to the end user or owner”

36

TYPICAL EPC ARRANGEMENT

OWNER

EPC CONTRACTOR

PROCESSENGINEERING

VENDORSTRADE

CONTRACTORS

SITE SERVICES

37

TYPICAL EPCM ARRANGEMENT

TRADECONTRACTORS

PROCESSENGINEERING

SUB-CONTRACTORS

SUB-VENDORS

SITE SERVICES

EPCM CONTRACTOR

OWNER

38

RISK SUMMARY

EPCRisk for CONTRACTOR and more effective for OWNER.Budget, schedule and performance risks are transferred to EPC contractor.

EPCMRisk for OWNER. EPCM is a professional service as opposed to a partyto the contract.

EPC/EPCM mix

Taylor made form of CONTRACT, complicated and difficult to make workable.

SELF PERFORM100% Risk for OWNER with no contractor.

39

BASIC ENGINEERING (FEED)

40

BASIC ENGINEERING (FEED)

Basic engineering is a term commonly used to define concept design and is commonly known in EPC and EPCM projects as front-end engineering & design (FEED)

The FEED is normally a separate contract to the EPC and executed on agreed rates and prices.

The end of FEED is the start point of the EPC which is executed on the basis of lump sum or reimbursable cost

41

BFS TO EPC

42

FS to EPC Proposal ConversionTransparency during Open Book Process

IND

IRE

CT

C

OS

TS

CO

NT

RA

CT

OR

RIS

K

AC

UR

AC

Y /

ES

CA

LA

TIO

N

Value Improvement /

Basic Enginering /

FEED

Enginering /

Initial Procurement

Lump Sum EPC

Execution

IND

IRE

CT

C

OS

TS

CO

NT

RA

CT

OR

RIS

KA

CU

RA

CY

/

ES

CA

LA

TIO

N

OPEN BOOK OPEN BOOK CLOSED BOOK

MILESTONE 1 MILESTONE 2

2 - 3 months 3 months

DIR

EC

T C

OS

TS

DIR

EC

T C

OS

TS

Fixed Price Lump Sum

(EPC)

Guaranteed

Maximun Price

(GMP)

COST OPTIMIZATION

TIME

Memorandum Of

Understanding

(MOU)

EPC PATH

43

FS to EPC Proposal ConversionTransparency during Open Book Process

SCOPE

• Review engineering Performed during FS

• Assume process will not change

• Review quality of Budget Price received (equipment, contractor, etc.)

and performed comparison with in-house data

• Finalise procurement and contracting packaging plan

• Update quotations

HIGH LEVEL DELIVERABLES

• Revised CAPEX estimate (AACE Class 3) 10-40% including final EPCM

• Project Master Schedule

• Guaranteed Maximun Price (GMP)

• EPC Term Sheet

FS GMP

44

SCOPE

• Finalise Basic Engineering, Commence Detailed Enginering

• Major equipment package tender and evaluation

• Pre-qualification of contractors, issue RFP/RFQ, undertake initial

evaluations

• Produce final CAPEX estimate

• Finalise EPC contract

OUTCOME

• Detailed design progressed to 10% complete

• Major purchase orders awarded / ready for award

• Earthworks and civils contracts awarded / ready for award

• Final CAPEX estimate (AACE Class 2 30-75%)

• Final Project Schedule

• LSTK EPC Price & contract

GMP EPC

45

4646

INCORPORATE ADDED VALUE AT EARLY STAGES

TEAM BUILDING WITH CLIENT

TRANSPARENCY DURING PROPOSAL PREPARATION AND EXECUTION

TRACEABILITY FROM FS TO PROJECT EXECUTION

SECURE COMMITMENT WITH PROJECT BUSINESS PLAN

TARGET CAPEX FOR EPC CONTRACT

PROVEN KNOW-HOW TROUGH TECHNOLOGY PARTNERTS

TRACK RECORD DELIVERING IN TIME, COST AND QUALITY

WIN-WIN SOLUTION

SUMMARY OF ADVANTAGES

47

THANK YOU TERIMA KASIH